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Friday, 28 June 2013

Why I'm betting on a return to normal markets

By Stephen Gandel, senior editor

AQR Capital's Cliff Asness, who runs one of the world's biggest hedge fund firms, says now is not the time to freak out.

No black swans here.

That's the opinion of hedge fund manager Cliff Asness, who runs AQR Capital, which is one of the industry's biggest firms with $80 billion under management. The rapid move up in interest rates and the recent 800-point two-day drop in the Dow Jones industrial average (INDU) has more than a few investors worried we might be seeing the beginning stages of a new economic crisis.

Adding to the anxiety is the fact that all this seems to be triggered by Ben Bernanke's suggestion that the Fed may soon curtail its bond buying stimulus program, which some have been warning would spell doom.

Asness's advice: Chill out. The investor says the effect of the Fed on the market has been exaggerated. He expects the recent combined rout of stocks and bonds to be over for now. "There is absolutely no reason for this to continue," says Asness. "There is no liquidity crisis or big unwind. This is not 2008."